rishaad: japan during the 2018 party leading the asia-pacific. the topics has its levels not seen since the early 1990's. until one of the big losers admitting its chips are vulnerable to hackers. the problem is industrywide and is not unique. bitcoin under new pressure in china with some facing power cuts and enormous demand simply draining the system. in hong kong. haidi: in sydney, also coming up, falling out badly. steve bannon attacks his former boss. the president hit back saying ban and not only lost his mind. this is bloomberg markets asia.

♪ rishaad: have a look at one of the biggest shows in town, a fairly benign set at the own see helping to propel the markets in the u.s. to fresh highs. take a look at the bloomberg terminal, telling you how things are relatively calm in the u.s. economy. up, and keeping inflation trying to get to the 2% level over here. this has been hovering about 1.5%. somethingy we have like three interest rate hikes in store for the next 12 months.

that is what is giving a little bit of optimism to continue the rally we saw in 2017. haidi: much-needed support when it comes to the u.s. dollar, just bouncing off slightly and sustaining gains. it was a three-month low as of yesterday. , but alsoore hawkish u.s. manufacturing. the best result in three months and certainly the best year for u.s. manufacturing since 2004. we are getting that exuberance with 30 minutes out to the opening in hong kong. hoping to see china markets joining in on the party. sure.playing catch-up for off the first day of trading for 2018. the weaker yen being helped.

and the topix not to be outdone, gaining 1.5 percent this thursday. we see green across the screen when it comes to taiwan, singapore, and malaysia. enthusiasm has waned for shares with the costly now fighting, during -- being dragged lower. currencyomes to the space, that dollar rebound is helping to stop a rally we have seen of late that have caused equity bulls. we see the taiwanese dollar slide softer for a second session after reaching their novemberevel since 1993. and the one is the focus of the bank of korea this morning. the central bank is to take action on excessive one-sided moves. five-dayssure after a

advance. we have gold under pressure given the dollar trading at 1309 announced. and we have copper sliding with aluminum. gains,ices maintaining expected to slip. energy shares lead the charge in with and i.t. stocks also the gains. the i.t. sector gaining 3% this morning. we also have the final read helping to boost this goal, that the economy is improving. up.orders also picked ,ow to check in on some movers potentially checking in on taipei. apple suppliers and bart is anticipating iphones, not dampening enthusiasm for these stocks. a company said the range of its chips are vulnerable to hacking.

extending a drop for a third day. soaring and jumping to a june 20 that -- 2008 hi. ae cryptocurrency rose to record on wednesday after adding over 130% over the last week. just can't get away from that digital currency. >> one of the worlds biggest chipmakers forced to defend itself. in first word news. intel devices exposed to android, chrome, and cloud operating systems. admitting a design exploit. the information making them vulnerable to hackers. intel says fixes are coming. the impact to business,

microsoft says it has already issued. president trump has denounced a top strategy. they criticize the president. he was five, he lost not only his job but his mind. a storm barreling up the eastern seaboard. bomb cyclone.

1550 mobile, trailing average estimates by about half. minors are benefiting from low-power prices in some areas. powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen.

backing, continued gradual rate increases. >> we know they are going to continue. at the quarter, it is locked in. they're debating where inflation is headed. it seems to be all about that. the family says, this is just it.

>> the power fed will be a bit more dovish. a time be taking over at in the economy is going and a pretty good clip. following through the economy and another. the tone in their speeches. >> it is really important to listen to this many. >> what does it mean for asia central-bank? >> it is one of the biggest flash willjust how the fed tighten. will it go harder.

the transition mechanism with the exchange rate, and we have weaker currencies. there is a feeling in asia already. it is gradual. again, the prime in december sticking with powerful easing and nothing in australia. narrative, toward tightening territory. mr. powell will do a takeover and much harder than the economy anticipated. >> achy so much, getting some update. time, north korea

coming in telling the south it has nothing. keeping an eye on that story. for diplomatic negotiations, the solution to the geopolitical tensions during the winter olympics. it comes against the backdrop of course. , the power president of the nuclear buttons versus that of kim jong-un. still up ahead on bloomberg markets, the latest economic service datahina, for december is set to be released later this hour. rishaad: the ties to the record, is this the start of another bumpy year for equities in

emerging markets? we have the outlook. this is bloomberg. ♪

this is bloomberg markets: asia, i'm haidi lun in sydney. rishaad: there for the first time this year, they expected inflation boost for japan this year as retailers appear to be able to hide prices. they are ahead of the asia-pacific macro strategy. tell us about this. >> we are talking for such a long time about how japan is seemingly unable to produce any inflation at all and what we're seeing from the proprietary indicators is that an actual fact of seeing online prices, retailers online are bumping up prices about 1.5% to 2%, which

is systemic to the doj target. we see consistency in terms of the prices. it's a long way to go. >> it is, but it opens the question about whether they might see the japanese stock to push back a little bit further on the kiwi or further accommodative policy and if it becomes a little bit more confident going forward. >> that inflation rising very slowly. there is a growth story here as well. >> there is, and a global story here as well. since i've been coming on this program, we've talked deflation, about interest rates, and accommodative policy. the indication of what they're going to do for this year.

maybe, some way away. and getting better numbers. there is a growth story. the green shoots of recovery. it is a story for quite some time. is there still the correlation when it comes to yen strength? if you look at the unloved environment, the u.s. dollar is trading at a moment and morgan stanley cannot with a call for yen to trade at 105. at what point does that become an issue? see this correlation between the strength of the currency and the strength of the equity market. >> the correlation is still there. it would not be a strong as it has been in the past. think about japanese equities because the currency has been relatively stable. go to 105 or 120, it has an impact. we still have to consider the

fact that as far as equities are concerned, it has the earnings story and the global growth story. very good for the cyclical markets that tend to feed off global growth. it seems to be more of a cord needed effort in terms of global growth. if you are in south korea are in the market for that heavy leverage to global growth. it is still an environment for growth. >> if you continue to bind to the global reflation story, it almost looks like it was tumbling a little bit to the end of last year. as that mean it will be a major one in terms of drivers? >> this has become quite evident early in the year. at the back end of last year as well, the pickup in commodity , somethinggenerally

like these markets that we have leverage and they are on an upswing. we're talking about the pickup in growth. very supportive here. this stories in the commodities are slightly different. commodities can be the story for the end of this year. it is now factored into people's expectations. the outperformance of those currencies. commodities doing well and is general uptick we are seeing more on global growth. >> not necessarily having an impact on inflation as such. but maybe somewhat down the road. >> there is a structural thing that's missing, very much debated by the fomc.

it feels like there's just as many members that think that three this year might be too much. there is a chance i can see there is a bit of a reiteration, you mentioned it being one of the ones you're watching this year. historically at the u.s. and u.s. interest rates, they stood out a little bit because it was turning around and saying the days of very accommodative monetary policy coming to an end and being priced on the back of that. and when you look up at the interest rates, it is more reflective of stronger demand conditions and emerging markets tend to do quite well. we shouldn't get over concerned about interest rates.

if the pickup of interest rate is a reflection of stronger conditions, ath few minutes ago regarding the pickup in global growth. in that is the driver of higher inflation, the market can still those conditions. rishaad: i'm not sure if you're in that camp or not, but how does that play out for monetary policy for emerging markets in this part of the world? >> is the dollar going higher or lower? >> you've got to make the call. again, coming back to the inflation indicators, when you strip out the effects of fuel prices, inflation has picked up in the last few months. there is some semblance of truth.

in 2018, it was a bit of a game changer. and then dollar weakness had central banks and putting their foot on the brake. rishaad: and it is covered? europe is interesting because we haven't seen a pickup of inflation and we spoke about japan. the interesting things we had to look at the numbers out of the eurozone, they are very strong. they are not seeing this inflation.

the ecb doesn't have to do anything in the near term in terms of the policy. you will see a shift higher in eurozone inflation. really expected a price for that. , you might see the ecb less accommodative going forward. in which case, the value you seen in the euro recently, that is a conviction case potentially. in the beginning of the year, the markets are quite well. earnings in terms of valuations and in terms of general expectations, the monetary policy is accommodative in the near term.

it hasn't changed much in the beginning of the year. and you are trading on $1.20 at the moment. haveet's show you what we in the bloomberg terminal. the interactive function, tv go. have a look at some of the securities and the bloomberg functions we mentioned to the conversation. this is for bloomberg subscribers only. check it out, tv . ♪

haidi: a quick check of the latest business flash headlines, is going -- spotify public in a high-profile test of a technique that lists shares without raising money through a traditional stock offering.

do be the biggest company by far to attempt a direct listing. >> picking available operator, the $100 million investment in the company has now acquired it outright. deal was an the indication that the right healing industry is increasingly being dominated by absolute global companies. ask mercedes topped the luxury car sales list for a second year, whether in the shrinking market by tapping into the driver's love for suvs. deliveries of the crossover surged 53% last month carrying mercedes to a record december in the u.s. and patted the lead over bmw and lexus even as annual sales slipped slightly.

we look at why the president's former top strategist is now his biggest enemy. this is bloomberg. ♪

rishaad: victoria harbour right here in the heart of hong kong. approaching at the moment. the market participants, we have the fed and more of the same, really. in the gradual approach to monetary policy. japan enters the fray, giving a verdict on the rally we have seen this year. levels we looking at haven't seen since the early 1990's in the commodities markets. traditionally seen as being above the level where shale drilling kicks in.

that number to come out and last withot least, investors what is to come on the u.s. jobs report. >> that december manufacturing gauge for the u.s. coming on the strongest year for u.s. manufacturing since 2004. we also have the slightly more hawkish fomc minutes. the u.s. dollar across the asian session as well. just gettingre involved in this rally. picture formixed the shanghai composite, marginally higher washers and shenzhen were under pressure and large caps just gaining ground ever so slightly. take a look at the picture, the hang seng is climbing for an eighth straight day. watch for the related stocks in shanghai that may move on reports that the bmg could

extend gains that we have seen on wednesday. now we have seen offshore yuan with the first day of weakness. that drag along with the rebounding dollar. checking in on tech shares in hong kong. lenovo on the radar here following intel's admission that the chips may be vulnerable to hacking. ground.k gaining apple suppliers, ac tech and the obstacle are falling. tencent extending gains for a third session. the petrochina are leading gains for the index. suisse opining that mainland chinese investors are still favoring property and banking stocks in hong kong

primarily to the relatively cheap valuations. annual results will very likely as npl improve and men's expand. nomura saying that december the dropemand, that is we saw in revenue, rather the slowdown we saw in revenue. retail sales grew more than forecast in november and it was the best set of numbers. and they are gaining ground this morning. move, justay also picking up about .4%. rishaad: it does seem steady as she goes for monetary policy and the united is eight.

paul: the dollar gained after most policymakers showed gradual rate hikes. the fomc expects tax cuts to boost consumer spending and business investment. wrestle over to the outlook for inflation and concerns about a flattening yield curve. ature traders and chances for march rate hike. the antiestablishment protests across the country are all over. they quoted commander muhammad ali jafar he saying there is evidence to support the claim, at least 20 people have been killed in protests and almost 1000 arrested. the malaysian transport minister says an announcement will be made next week on resuming the mh 370.or is in final negotiations in media reports say u.s. company

shippedd infinity has the search area. with 239 people on board. the search led by australia was called off. was the comeback, espn most viewed cable network in prime time during the fourth quarter, having lost a china -- a channel. , a risen in the evening of 13% from the year before. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: after banning ico initial coin operating, the bitcoin miners reportedly

pushing to curb their values. taking advantage of low electricity prices. what have we noticed about these curbs? it takes an awful amount of energy. there.00 servers out >> what sources of toward my colleagues -- have told my colleagues is that the china central bank had a closed door meeting on wednesday about the potential power curbs. it will involve local officials in china that have been asked to asestigate power consumption well as the national development of the reform commission did overseas the power supply. there is corrugated action to curb power supply. rishaad: the question is, behind this from the chinese government.

>> taking advantage and might even be affecting normal electricity consumption. bitcoin mining is especially energy intensive and the chinese government has never been a huge fan of cryptocurrency. it has banned crypto currency trading. we also see the so-called scarcity and decentralization, excuses for bitcoin. in terms of the broader crypto world, how significant is this move? >> bitcoin mining is one of the areas where china still holds a massive advantage. china is home to some of the largest mining companies in the world, including the number one

bit made. yesterday, we didn't see a huge drop in bitcoin prices. it is up a little bit. they are still waiting to hear more details about the implementation. if this is true, it would be a huge change for the bitcoin mining industry. these, president trump has a nasty former chief .trategist it when steve bannon was fired, trump says he not only lost his job but lost his mind. sarah huckabee sanders was asked if the war of words could hurt the presidents support race. >> at on think it is anything to the presidents base. the people that supported this president supported the president and supported his agenda. those things haven't changed.

the president is exactly who he was yesterday and two years ago. his agenda hasn't changed, he's continuing to fight for and push for that agenda. i think the bases extremely excited and happy with the job his president has done first year in office. rishaad: jodi schneider joins us. >> when he left the white house earlier this year, it didn't seem to be a big risk. he wished him well.

it is embarrassing about his son. even the white house press secretary says he was disgusted. it was conversations where bannon has said that donald trump, jr.'s conversation with russian lawyers was going to be the subject of his investigation >> there have been questions about the author's credibility and a bit of a caveat. an investigation at the heart of all this which is and it gets closer to

the president. steve bannon called it treacherous. >> and i think it's closer to the president's inner circle. this is what he's been wearing about all along. and obviously, when we disparage -- when there are disparaging remarks about his family. it is not at all friendly between the two and it raises questions about the senate campaigns. candidates running against republican incumbents including people like senate majority leader mitch mcconnell. at a time when congress is confronted with yet another impasse on the budget. >> january 19, they have kicked

the can down the road a couple of times already to get past the september 30 date they were supposed to start funding the government again. so now we have to come up with a solution pretty quickly here, and we just come back into session. there is a big discussion about the so-called budget cap where automatic spending cuts go into effect. they may not be able to come up with a solution to that before january 19 and come up with another solution. at some point, they will have to deal with funding the government in a longer-term fiscal year. there doesn't seem to be huge debate. it seems like they are leaving things like immigration off of this. at the same time, they are having trouble coming up with that longer-term funding solution. >> you have a busy start to the year. round of, the latest

numbers is just a few minutes away. we will get a look at whether china's growth can extend across service sectors next. this is bloomberg. ♪

you are back with bloomberg markets. and i'm haidi lun in

sydney, awaiting the services and composite numbers, waiting to see if it continues to paint a broader picture when it comes to the chinese services sector. beating expectations this week on top of the official gauge which was largely about consensus. the composite number coming in at 53, really picking up in the previous month of november. the services here coming in at 53.9, also a beat on expectations of 51.8 grade and pick up from 51.9. really a picture of strength when it comes to chinese manufacturing and the services sectors. add color to also this picture of the global synchronize recovery story as well. we're entering this time where we have christmas that passed and also the chinese new year. it does tend to add some signal distortions coming out over the next couple of months.

it's odd, what we have seen with the manufacture. have been tearing up, making revisions. they are doing so to the upside. jpmorgan is one of them. and you have the numbers and feel vindicated for doing so? particularly, the performance in the last economy. the u.s. and the euro area is much better than we thought. the lost level, it is everybody

focusing on the u.s.. demand is recovering very well. for people that force a lot on the domestic front. you can look at the manufacturing side of things and come up with the picture you're talking about. exports doing well, the economy doing well. and internally, domestically. export, recovery, improvement of cost is supporting the labor market condition. export is higher by 20% of the labor market. , it isernal conditioning very strong. the employment conditioning is very stable. there is consumption growth. haidi: the critical growth they

have set out to try to conquer this year, are they going to be able to do that? maintainxtent, and 6.5% growth? us to theed to give policy work. we do see some progress already , and also addressing the financial deleveraging. they have made encouraging progress in 2017. one is anews is that global environment turning more positive. front, although the structural reform has failed, there is growth. on the other hand, consumption is very stable. manufacturing investment could bottom up in 2018.

it can be very stable. -- haidi: what does that mean for the pboc? do you expect more of a convergence when it comes to policy? we had that surprise to the money market rate in the end of last year. >> the bbo see policy language has been unchanged. the monetary policy has been on that site since 2017. one example is that the extra credit conditioning has been decelerating. it is related to the financial deleveraging which will continue in 2018. the policy rate following the path of the hike in 2018. we don't expect any change, but i will say that probability of the interest rate is increasing

at this moment. rates, wend repo think it will be three moves to the upside. it is there to keep an eye on what the fed is doing. >> there are now three sets of interest rates in china. the benchmark policy rate has not changed. if you look at mark interests, it is much faster. the consistency between the three sets of interest rates. it truly is what it is. rishaad: since may have 2016,

what was the signal of the dollar weakness story? >> the currency is at a less monetary policy. it is the exchange rate. when a dollar weakens, it goes against the u.s. dollar. rishaad: they have the rates at 6.5, slightly weaker there. thank you for your thoughts. intel catching chips, and other major manufacturers could be left open to cyberattacks. it this is bloomberg. ♪

haidi: google says the vulnerability and chips from intel advanced micro disasters chrome and clout

operating systems after intel admitted there was exploit to access privileged information make them vulnerable to hackers. >> the world's major technology companies are facing a widespread security issue this week. flaws based on a process called speculative execution. the devices to anticipate what the user is going to do next. such as intel for about a decade. the flaw is embedded for many tablets,oss tons of gaming consoles. biggest companies like

amazon and google. amazon says it is patching the issue and it doesn't affect consumer and business consumer customers. they have already released a security update for android phones. intel, which is really at the heart of the issue, they confirmed it has a next point. microsoft are working to look into the consumer devices. they are grappling with vulnerabilities and chips and a whitening crisis. let's could you up-to-date with the latest is this flash headlines. the possibilities include the pallet operation. it used to generate $107 million in annual profit that has been closed for two years.

stocks of more than doubled. the securities rose about 125% in early trading, just shy of the 132% gains for the whole of last year. the further vindication that the -- boeing is just seeking control by offering brazil safeguard. the businesses without compromising it. flexibility, and how they have the more hawkish than expected. it we get the head of number a

economics. this is bloomberg. ♪ is this a phone?

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